Avoid These No-Nos as a New Turnkey Rental Owner
Being a turnkey rental owner is a no-brainer, right? You buy a property, get checks deposited into your account and go about your day. There’s a little more to it than that, though. While owning a turnkey rental is a means to get passive income there are a few tiny mistakes it’s possible to make in the beginning that can get you off on the wrong foot. We’ve compiled a list of the most common no-nos to avoid as a new turnkey rental owner:
Firing Your Property Manager Right Away
Every turnkey rental owner wants to make as much profit as possible. Since property management is one of the expenses that cuts into profit, the first thing that many inexperienced turnkey rental owners do is fire the property management company. They figure that they’ll be able to deal with whatever issues might come up. And, since a tenant is already in place, they won’t have to deal with getting a new tenant for a long time.
All of our MartelTurnkey turnkey rentals come with trusted and experienced property management in place. We stake our own reputation on the integrity of those PMs. We feel their services are worth every penny, and we think you’ll agree. You’re always free to find a new PM or just fire the one you have and go it alone. But we don’t recommend it. It’s true that anyone can pick up a phone and call a remote plumber to go check out a broken dishwasher or a burst pipe. But is that really the life you wanted when you started looking for passive income opportunities? Do you really want to try and figure out how to interview tenants remotely and get leases signed? The smart choice is to wait at least six months before making any decision about your property management company.
Knocking on Your Tenant’s Door
Our new turnkey rental owners are always excited about being new property owners. We get it! It’s an amazing thing to know that you’re a landlord and that you’ll be getting passive income checks in the mail every month! But some new landlords also want to meet their new tenants. It’s natural to be curious about the person or family who’s living in your property. But going to the property and knocking on the tenant’s door isn’t a great thing to do. First of all, they don’t have to invite you in unless you have a reason and give them 24 hours’ notice. The situation would be awkward if you just show up unannounced. Remember that, from the tenant’s perspective, that property is their home. It’s where they hug their family and tuck their children into bed each night. While you’re the person who makes that possible by allowing them to rent from you, that doesn’t mean you should intrude on their privacy. Your property management company can tell you all you want to know about your current and future tenants. If you’re still madly curious and you can’t help yourself, you can ask—through your property manager—if the tenant would be willing to meet you briefly if you’re ever in town. You could actually use the opportunity to ask if the tenant is happy or if they have any concerns. And almost any tenant would be appreciative of an attentive landlord!
As a proud turnkey rental owner, you may feel the urge to “pretty up” the rental. This is what you’d do if you were going to live in it, right? And it’s only natural that you want your tenants to have an attractive living environment. But remember that your family doesn’t reside in the property. It doesn’t have to live up to your personal standards. In fact, in today’s climate, most cash flowing rentals are in out-of-state areas where the real estate investor may not want to live. The other thing to bear in mind when you buy MartelTurnkey turnkey rentals is that your new turnkey rental was already fully renovated before you purchased it. You can always review the full list of completed renovations on our website. Your tenant is already enjoying life in an attractive home without you spending money on window boxes, landscaping, paint, curtains, etc. Save your money so you can buy another turnkey rental in the future for even more passive income!
Foregoing a Buffer Fund
As we said, when you buy a MartelTurnkey turnkey rental your property has already been fully renovated. If it needed a new roof, we put one on for you. If the HVAC system was about to call it quits, we replaced it for you—all before you ever purchased the property. Having said that, things do break. They need to be replaced or repaired. Once you take ownership, you should be prepared for certain expenses over the years, just like owning any house. One of the mistakes that new turnkey rental owners do is to take all their passive income and spend it or tie it up. Of course, spending some of it is expected. That’s what money’s for, right? But you don’t want to get caught ten years down the line with a bill for a new front porch and not have the cash to pay for it. Our advice? Set up an account where all your rent money is automatically deposited by your property management company. Retain a percentage of it to cover unexpected expenses. That way, your rental is fully paying for itself and you’ll never have to pay out of pocket.
When you buy a MartelTurnkey turnkey rental, you’ll be supplied with everything you need to be a smart—and profitable—real estate investor. But if there’s ever a time when you need some advice about what to do or what to avoid, we’d like you to contact us. We’re not just your turnkey rental provider when we have something to sell. We’re your real estate investment partner for life.